The government should reduce GST on premium hotel rooms to 9 per cent from the current 18 per cent, to improve competitiveness and attract more foreign tourists, according to a joint report by EY India and FICCI released on Monday.
The report, unveiled at Great Indian Travel Bazaar 2026 in Jaipur, said high accommodation costs, transport expenses and taxes make India appear more expensive than competing destinations such as Thailand and Vietnam.
It recommended retaining the existing 5 per cent GST slab for hotel room tariffs between Rs 1,000 and Rs 7,500, while cutting the higher slab to 9 per cent for rooms priced above Rs 7,500. According to the report, the move would improve affordability, enhance value perception and better align India’s hospitality
pricing with rival global markets.
The study, titled ‘Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities – Towards Incredible India 4.0’, said India needs a strategic shift from a fragmented destination-led tourism model to a unified experience-driven ecosystem.
“Higher cost of accommodation, transportation and taxes are the reason India is often perceived as an expensive destination in comparison to countries such as Thailand and Vietnam. India currently levies 5% GST is for room tariffs between Rs 1,000 and Rs 7,000 and 18% for tariffs above Rs 7,500. The 18% tax on higher tariff categories impact overall price competitiveness, particularly for international travellers. A reduced GST of 9% for tariffs above Rs 7,500 will enhance value perception, improve affordability across segment and better align India with competitive destinations,” said the report, which was released at 3-day long GITB 2026 being organized from April 26-28, 2026.
It highlighted several structural challenges holding back India’s global tourism potential, including fragmented state-led branding, weak global marketing outreach, lack of packaged travel experiences, and ease-of-travel barriers such as connectivity gaps and visa processes.
Despite strong domestic travel demand, India continues to lag in foreign tourist arrivals. The report estimated inbound tourist arrivals at around 9.9 million in 2024, modest compared with several competing destinations.
Tourism currently contributes around Rs 21 lakh crore to India’s GDP and supports more than 46 million jobs, underlining the sector’s importance to the broader economy. The report added that India’s hospitality pipeline now exceeds 1 lakh rooms, making demand generation critical for sustainable growth.
It also pointed to emerging opportunities in high-value segments such as sports tourism, culinary tourism, spiritual wellness, wildlife travel and event-led tourism.
India’s live entertainment industry crossed Rs 12,000 crore in 2024 and is projected to grow at nearly 19 per cent CAGR over the next three years, making concerts, festivals and sporting events potential drivers of inbound travel, the report said.
The report further noted that AI tools and digital platforms are reshaping travel discovery, while the rise of Gen Z travellers, women travellers and solo tourists is changing demand patterns.
Looking ahead, international visitor spending is projected to grow at 5.5 per cent annually to reach $2.95 trillion by 2034, presenting what the report called a major opportunity for India.
It said that with coordinated policy reforms, competitive pricing and a stronger experience-led tourism strategy, India can convert its cultural diversity and attractions into a stronger global tourism advantage.
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